Using OTC desks to invest in DeFi: 5 platforms you should know about

Using OTC desks to invest in DeFi: 5 platforms you should know about
Using OTC desks to invest in DeFi: 5 platforms you should know about

OTC desks allow investors to buy and sell large sums in BTC at a locked-in price. But what if your goal is not to stash away BTC but to enter the lucrative DeFi market instead? You can do it via OTC, as well, and this article will explain how. 

Why whales like OTC

OTC, or over-the-counter trading, means settling trades outside of exchange order books. Usually you need to make a large purchase to benefit from OTC services. Over-the-counter exchange desks have several advantages:

1) Privacy: nobody will know about your trade, since it won’t appear on the order books.

3) All in one go: you don’t have to split your orders, even if the amount is large.

4) Ready liquidity: no need to worry if there’s enough demand

5) Price is locked in: since the trade is executed in just one order, there’s no slippage risk;

6) No effect on price: even a very large order won’t drive the price up or down.

Over $12bn worth of BTC is traded through OTC desks every day. But of course, over-the-counter services aren’t limited to Bitcoin: you can also buy Ethereum and – very importantly – various DeFi assets. 

Decentralized finance is arguably the hottest trend in crypto at the moment, with yields in some protocols exceeding 12%. It’s a savvy investment decision to include some quality DeFi projects in your portfolio, and this can also be done via OTC. It will save you time and money, protect your privacy, and prevent price fluctuations as a result of your order.

OTC platforms that let you access DeFi

1) Binance OTC

The desk has been in operation since January 2019. It supports all the coins listed on Binance and allows you to buy crypto for fiat. 

Pros:

– 80 tradable assets, including popular lending assets USDT & USDC and staking coins (LOOM, KAVA, ALGO etc.);

– Built-in staking platform that supports 20+ PoS coins. 

Cons:

– Very high order threshold: a trade order should be worth at least 20 BTC (over $200,000). This makes Binance’s OTC desk inaccessible for most retail investors.

2) Waves.Exchange

This is the only OTC desk that allows you to buy USDN – a decentralized stablecoin that yields 12-15% a year through staking. It’s also one of the very few OTC platforms suitable for retail investors (minimum order from $10k).

Pros: 

– You can trade from just $10k – this is the lowest requirement among all major OTC platforms;

– Exchange rate is fixed at 1 USDT = 1 USDN, both when converting to and from USDN;

– Purchased USDN can be immediately staked to earn 12-15% a year;

– Transaction fee is less than $0.1, regardless of the amount;

– Works 24/7 without weekends and holidays;

– Runs on a smart contract.

Cons: 

– Available only for the USDT/USDN pair;

– When converting back from USDN into USDT, there’s a lock-up period of circa 24 hours to prevent arbitrage manipulations.

3) Kraken OTC

Kraken greatly expanded its OTC operations after it bought Circle – one of the largest crypto OTC desks – in December 2019. 

Pros:

– Supports major DeFi assets: USDT, USDC, DAI, XTZ, ATOM;

– 24/7 operations; 

– Automated dashboard to procure quotes.

Cons:

– Minimum trade size is $100k – outside of reach for most non-institutional buyers

4) Bittrex OTC

This desk is heavily geared at US customers. 

Pros:

– Supports circa 200 assets, including USDT, USDC, XTZ, LINK, TUSD etc.

– Crypto can be purchased directly via a wire transfer.

Cons:

– Minimum order size is $250,000;

– You have to demonstrate the source of funds and complete a master purchase agreement before you can trade;

– Tickets are processed only between 9am and 6pm PST;

5) Genesis Block

This OTC desk is based in Hong Kong, with an additional office in Thailand.  

Pros: 

– Low transaction threshold: at least $12,700 (HK$100,000);

– OTC trades are placed via a secure chat.

Cons:

– The only major DeFi asset available is USDT;

– Relatively high fees (2-3.2%); 

– Only open during Hong Kong trading hours (10am – 11pm HKT), closed on weekends.

Is it easy to enter DeFi via OTC?

As you can see, OTC desks differ greatly in terms of their minimum trade sizes. If you are looking to buy less than $50k worth of DeFi assets, your choice is basically down to Waves.Exchange, Genesis and a few smaller platforms. While the exchange rate won’t necessarily be better than on a public exchange, at least the price will be locked for the duration of the trade, and you won’t need to worry about the daily or weekly withdrawal limits.

Another question is if it’s worth investing in DeFi at this point. Here the answer is yes – but with caveats. Stable assets like USDN, USDT and USDC will continue generating good profits (up to 15% in case of USDN staking) thanks to their stable, sustainable yield models. On the other hand, the most recent DeFi craze – yield farming – is past its peak, so it would be unwise to invest large sums in ‘farming’ coins like COMP or YFI. 

Buying DeFi coins via OTC has its limitations, but it’s still easier than trying to buy dozens of thousands worth of crypto in the open market, with its volatile prices and limited liquidity. Most importantly, you’ll avoid slippage and retain your privacy.

 

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